Critical of the performances of SAIL and RINL, the steel ministry has asked the two PSUs to enhance their performances, arguing that when others are able to take advantage of its policies, there should not be any reason why the two will lag behind. “The policy of the ministry is the same. If 81% is able to take advantage of it, then 19% of it should not lag behind,” steel secretary Aruna Sharma told FE. Of the India’s 126 MT steel-making capacity now, 19% is with SAIL and RINL. The rest is with the private sector.
The steel ministry is perturbed at the performances of the two PSUs. SAIL has been incurring losses after losses for the last seven reported quarters so far. While the same trend might have continued in the final quarter of the last fiscal, it can even be in the red for the entire current fiscal. However, even as SAIL has, of late, become EBITDA positive, sources said RINL will take some more time to become EBITDA positive.
While depressed steel prices have hurt domestic steel firms the government has taken a series of tariff and non-tariff measures to protect the domestic industry from the onslaught of imports with the latest being imposition of long-term anti-dumping duty for both hot-rolled and cold-rolled products.
“The ministry is monitoring the performance of these two companies plant by plant. The ministry is also setting independent targets. We don’t want to undermine their capabilities, but they have to tighten their belt. It is very clear. We are also tightening the belts,” Sharma said.
A plunge in the prices of steel has seen SAIL reporting a lower top line the last three years: from Rs 53,470 crore in 2014-15 to Rs 43,934 crore in 2015-16 and Rs 31,330 crore in the first nine months of 2016-17. However, the company is targeting revenue of Rs 64,155 crore this fiscal.
RINL incurred a loss of Rs 1,421 crore in 2015-16. Though remained in the red, RINL’s turnover grew by 4% to Rs 12,781 crore in 2016-17 over Rs 12,281 crore in 2015-16.